Mail Gains in Acquisition for DirecTV

Since DirecTV Inc.'s direct sales division began an ongoing subscription acquisition effort, the percentage of customers acquired via mail has grown from 8 percent in 2001 and 12 percent in 2002 to an estimated 23 percent this year.

The direct sales division dropped 6 million mail pieces in 2001 that generated 21,000 new customers out of the 250,000 gained that year. The quantity rose to 10 million mail pieces in 2002, resulting in 42,000 new customers out of 355,000 generated by the division.

The El Segundo, CA, satellite-TV provider is sending 38 million mail pieces this year. It expects 155,000 new customers from that tactic out of 685,000 total new subscribers from the direct sales division. Next year, 40 million to 50 million mail pieces will drop, projected to generate 180,000 new customers out of 800,000 for the division.

"As direct sales continue to grow, direct mail continues to be a larger contributor of the overall sales of the division," said Tammy Benedict, senior director of direct sales at DirecTV.

Working with Merkle Direct Marketing Inc. on the effort and using Merkle's prospect database and frequently updated mail response model, DirecTV identifies potential customers with the highest propensity to react positively, said Lance Williams, executive vice president of Merkle, Lanham, MD.

"Direct mail has proven to be a cost-effective strategy for acquiring new customers," Williams said. "DirecTV has been able to significantly increase the number of customers it can acquire through direct mail while improving the budgeted cost per customer."

The nation's second-largest provider of channels after Comcast Cable, DirecTV has 11.8 million subscribers. It boosts that number through retail stores, independent distribution and DM channels like mail, radio, print and television.

DirecTV's 3-year-old direct sales division seeks new customers through the 1-800-DIRECTV toll-free phone number, the site at www.directtv.com and mail. It does not disclose the DM budget.

The company typically uses variations of letter kit and self-mailer formats as control pieces for its solo mail campaigns. Shared mail and co-op campaigns also are used, as is testing of fresh creative to boost response rates.

This year's best performer is the self-mailer with a free two-room installation offer for a programming package starting at $39.99 a month (monthly subscription rates go up to $87.99).

DirecTV offers have become more competitive, yielding better results. It now runs a three-room offer. And a recently concluded 60-day free-trial offer performed well, Merkle said.

"It's a combination of creative and offers," Benedict said. "What we're testing is both creative and offers to continually beat that control."

A cross-section of the United States is targeted for DirecTV direct marketing. The focus is on local markets for local channels, directing some mail to non-local markets where it does not offer local programming.

Merkle's mail program frequency incorporates annual contact strategies. This aims to include variations in contact frequencies, prospect deciles, packages and offers to boost response. Essentially, the mail campaigns run monthly.

Mail's main allure is its value in return on investment. DirecTV's direct sales division recorded lower marketing costs and higher customer response rates by identifying the best prospects, shortening the new-subscriber sales cycle and tracking customer responses and promotional history.

"The challenge is targeting much-higher-quality customers, which will drive your lifetime value up," Benedict said. "If you're just using TV and mass media, you're not really just targeting folks."

In particular, Merkle created real-time availability to a data source that offers national coverage integrating vertical and niche lists as well as the agency's proprietary, nationally compiled DataSource database.

Using DataSource, Merkle expanded the prospect universe from an unknown number of non-targeted households to a single source of 75 million that are possible to target.

"DirecTV benefits by being able to respond to market opportunities as they arise in real time," Williams said. "Merkle increased speed to market by updating response and promotional history on a daily basis and giving DirecTV real-time analysis and implementation tools."

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